VOXX INTERNATIONAL CORP Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") (form 10-K)

This section should be read in conjunction with the "Cautionary Statements" and "Risk Factors" in Item 1A of Part I, and Item 8 of Part II, "Consolidated Financial Statements and Supplementary Data."

We begin Management's Discussion and Analysis of Financial Condition and Results
of Operations with an overview of the business, including our strategy to give
the reader a summary of the goals of our business and the direction in which our
business is moving. This is followed by a discussion of the Critical Accounting
Policies and Estimates that we believe are important to understanding the
assumptions and judgments incorporated in our reported financial results. In the
next section, we discuss our Results of Operations for the year ended February
28, 2022 compared to the years ended February 28, 2021 and February 29, 2020.
Next, we present EBITDA and Adjusted EBITDA for the year ended February 28, 2022
compared to the years ended February 28, 2021 and February 29, 2020 in order to
provide a useful and appropriate supplemental measure of our performance. We
then provide an analysis of changes in our balance sheet and cash flows and
discuss our financial commitments in the sections entitled "Liquidity and
Capital Resources." We conclude this MD&A with a discussion of "Related Party
Transactions" and "Recent Accounting Pronouncements."

Business Overview and Strategy

VOXX International Corporation is a leading international distributor,
manufacturer and value-added service provider in the automotive electronics,
consumer electronics and biometrics industries. We conduct our business through
nineteen wholly-owned subsidiaries and one majority owned subsidiary. Voxx has a
broad portfolio of brand names used to market our products as well as private
labels through a large domestic and international distribution network. We also
function as an OEM ("Original Equipment Manufacturer") supplier to several
customers, as well as market a number of products under exclusive distribution
agreements.

In recent years, we have focused our attention on acquiring synergistic
businesses with the addition of several new subsidiaries. These subsidiaries
have helped us to expand our core business and broaden our presence in the
accessory and OEM markets. Our acquisition of a controlling interest in EyeLock
Inc. and EyeLock Corporation allowed us to enter the growing and innovative
biometrics market. The Company has also made strategic asset purchases in order
to strengthen its product offerings and increase market share, such as the
acquisition of certain assets and assumption of certain liabilities of Rosen
Electronics LLC in Fiscal 2018, Vehicle Safety Holding Corp. in Fiscal 2020,
Directed LLC and Directed Electronics Canada Inc. in Fiscal 2021, and Onkyo Home
Entertainment Corporation in Fiscal 2022. Our intention is to continue to pursue
business opportunities which will allow us to further expand our business model
while leveraging overhead and exploring specialized niche markets in the
electronics industry. Notwithstanding the above acquisitions, if the appropriate
opportunity arises, the Company has been willing to explore the potential
divestiture of a product line or business, such as with the sale of the
Company's Hirschmann subsidiary in Fiscal 2018.

The Company classifies its operations in the following three reportable
segments: Automotive Electronics, Consumer Electronics, and Biometrics. The
characteristics of our operations that are relied on in making and reviewing
business decisions within these segments include the similarities in our
products, the commonality of our customers, suppliers and product developers
across multiple brands, our unified marketing and distribution strategy, our
centralized inventory management and logistics, and the nature of the financial
information used by our Chief Operating Decision Maker ("CODM"). The CODM
reviews the financial results of the Company based on the performance of the
Automotive Electronics, Consumer Electronics, and Biometrics segments.

The Company's domestic and international business is subject to retail industry
trends and conditions and the sales of new and used vehicles. Worldwide economic
conditions impact consumer spending and if the global macroeconomic environment
deteriorates, this could have a negative effect on the Company's revenues and
earnings. In an attempt to offset any negative market conditions, the Company
continues to explore strategies and alternatives to reduce its operating
expenses, such as the consolidation of facilities and IT systems, and has been
introducing new products to obtain a greater market share.

Although we believe our product groups have expanding market opportunities,
there are certain levels of volatility related to domestic and international
markets, new car sales, increased competition by manufacturers, private labels,
technological advancements, customer acceptance, discretionary consumer spending
and general economic conditions. Also, all of our products are subject to price
fluctuations which could affect the carrying value of inventories and gross
margins in the future.

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During March 2020, a global pandemic was declared by the World Health
Organization related to the rapidly growing outbreak of COVID-19, which began
spreading during the fourth quarter of our 2020 fiscal year. The pandemic has
significantly impacted the economic conditions in the United States, as federal,
state, and local governments have reacted to the public health crisis, creating
significant uncertainties in the United States, as well as the global economy.
In the interest of public health and safety, U.S. jurisdictions (national,
state, and local) where our primary operations and those of many of our
customers are located, required mandatory business closures and capacity
limitations during Fiscal 2021, or other restrictions for those that were
permitted to continue to operate. During Fiscal 2022, all of our operating
locations were able to re-open, some of which were at a reduced in-office
employee presence at certain times during the year in response to COVID-19
variant spread.

As a result of these events, the Company has experienced certain adverse impacts
on its revenues, results of operations and cash flows during Fiscal 2022. The
situation is still rapidly changing and additional impacts to the Company's
business may arise that we are not aware of currently. We cannot predict
whether, when, or the manner in which the conditions surrounding COVID-19 will
change, including the timing of the imposition or lifting of restrictions,
closure requirements, or any other limitations. Due to the changing situation,
the results of the first quarter ending May 31, 2022 and the full fiscal year
ending February 28, 2023 could be impacted in ways we are not able to predict
today, including, but not limited to, non-cash write-downs and impairments;
foreign currency fluctuations; potential adjustments to the carrying value of
inventory; and the delayed collections of, or inability to collect, accounts
receivable. The Company continues to focus on cash flow and anticipates having
sufficient resources to operate during Fiscal 2023.

Acquisitions and Dispositions

We have acquired and integrated several businesses, as well as divested certain
businesses, the most recent of which are outlined in the Acquisitions section of
Part I and presented in detail in Note 2 to the Notes to the Consolidated
Financial Statements.

Critical Accounting Policies and Estimates (see Note 1 to the Consolidated Financial Statements)

General

Our consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make certain estimates, judgments,
and assumptions that we believe are reasonable based upon the information
available. These estimates and assumptions can be subjective and complex and may
affect the reported amounts of assets and liabilities, revenues, and expenses
reported in those financial statements. As a result, actual results could differ
from such estimates and assumptions. During Fiscal 2022, there have been
continuous changes to the global economic situation as a consequence of the
COVID-19 pandemic. It is possible that this could cause changes to estimates as
a result of the financial circumstances of the markets in which the Company
operates, the price of the Company's publicly traded equity in comparison to the
Company's carrying value, and the health of the global economy. Such changes to
estimates could potentially result in impacts that would be material to the
consolidated financial statements, particularly with respect to the fair value
of the Company's reporting units in relation to potential goodwill impairment
and the fair value of long-lived assets in relation to potential impairment.

The significant accounting policies and estimates which we believe are the most critical in fully understanding and evaluating the reported consolidated financial results include the following:

Revenue Recognition

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from
Contracts with Customers. The core principle of ASC 606 is that an entity
recognizes revenue to depict the transfer of promised goods and services to
customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods and services. We apply the
FASB's guidance on revenue recognition, which requires us to recognize the
amount of revenue and consideration that we expect to receive in exchange for
goods and services transferred to our customers. To do this, the Company applies
the five-step model prescribed by the FASB, which requires us to: (i) identify
the contract with the customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligations in the contract; and (v) recognize revenue
when, or as, we satisfy a performance obligation.

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We account for a contract or purchase order when it has approval and commitment
from both parties, the rights of the parties are identified, payment terms are
identified, the contract has commercial substance, and collectability of
consideration is probable. Revenue is recognized when control of the product
passes to the customer, which is upon shipment, unless otherwise specified
within the customer contract or on the purchase order as delivery, and is
recognized at the amount that reflects the consideration the Company expects to
receive for the products sold, including various forms of discounts. When
revenue is recorded, estimates of returns are made and recorded as a reduction
of revenue.

Sales Incentives

Sales incentives are accounted for in accordance with ASC 606. We offer sales
incentives to our customers in the form of (1) co-operative advertising
allowances; (2) market development funds; (3) volume incentive rebates; and (4)
other trade allowances. We accrue the cost of co-operative advertising
allowances, volume incentive rebates, and market development funds at the later
of when the customer purchases our products or when the sales incentive is
offered to the customer. We record the provision for other trade allowances at
the later of when the sales incentive is offered or when the related revenue is
recognized. Except for other trade allowances, all sales incentives require the
customer to purchase our products during a specified period of time. All sales
incentives require customers to claim the sales incentive within a certain time
period (referred to as the "claim period"). All costs associated with sales
incentives are classified as a reduction of net sales.

Depending on the specific facts and circumstances, we utilize either the most
likely amount or the expected value methods to estimate the effect of
uncertainty on the amount of variable consideration to which we would be
entitled. The most likely amount method considers the single most likely amount
from a range of possible consideration amounts, while the expected value method
is the sum of probability-weighted amounts in a range of possible consideration
amounts. Both methods are based upon the contractual terms of the incentives and
historical experience with each customer. Although we make our best estimate of
sales incentive liabilities, many factors, including significant unanticipated
changes in the purchasing volume and the lack of claims from customers could
have a significant impact on the liability for sales incentives and reported
operating results. We record estimates for cash discounts, promotional rebates,
and other promotional allowances in the period the related revenue is recognized
("Customer Credits"). The provision for Customer Credits is recorded as a
reduction from gross sales and reserves for Customer Credits are presented
within accrued sales incentives on the Consolidated Balance Sheet.

Unearned sales incentives are volume incentive rebates where the customer did
not purchase the required minimum quantities of product during the specified
time. Volume incentive rebates are reversed into income in the period when the
customer did not reach the required minimum purchases of product during the
specified time. Unclaimed sales incentives are sales incentives earned by the
customer, but the customer has not claimed payment within the claim period
(period after program has ended). Unclaimed sales incentives are investigated in
a timely manner after the end of the program and reversed if deemed appropriate.

Business Combinations

We account for business combinations under the acquisition method of accounting.
The purchase price of each business acquired is allocated to the tangible and
intangible assets acquired and the liabilities assumed based on information
regarding their respective fair values on the date of acquisition. Any excess of
the purchase price over the fair value of the separately identifiable assets
acquired and liabilities assumed is allocated to goodwill. Determining the fair
value of assets acquired and liabilities assumed requires management's judgment
and often involves the use of significant estimates and assumptions, including
assumptions with respect to future cash inflows and outflows, discount rates,
and market multiples, among other items. We determine the fair values of
intangible assets acquired generally in consultation with third-party valuation
advisors. The valuation of assets acquired and liabilities assumed requires a
number of judgments and is subject to revision as additional information about
the fair values becomes available. We recognize any adjustments to provisional
amounts that are identified during the period not to exceed twelve months from
the acquisition date (the "measurement period") in which the adjustments are
determined. Acquisition costs are expensed as incurred. The results of
operations of businesses acquired are included in the consolidated financial
statements from their dates of acquisition.

As part of the agreement to acquire certain subsidiaries, we may be obligated to
pay contingent consideration should the acquired entity meet certain earnings or
other contractually agreed upon objectives subsequent to the date of
acquisition. As of the acquisition date, contingent consideration is recorded at
fair value as determined through the use of an appropriate fair value model,
depending on the nature of the arrangement. The models could involve the
estimation of future subsidiary performance, probability of likelihood,
projected cash flows, weighted average

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discount rates, and expected long-term growth rates. The fair value is measured
subsequent to the acquisition date at least annually and any changes are
recorded within cost and operating expenses within our consolidated statement of
income until the contingent consideration is settled. Changes in either the
growth rates, expected probabilities, related earnings, or the discount rate
could result in a material change to the amount of the contingent consideration
accrued.

Accounts Receivable

We perform ongoing credit evaluations of our customers and adjust credit limits
based upon payment history and current credit worthiness, as determined by a
review of current credit information. We continuously monitor collections from
our customers and maintain a provision for estimated credit losses based upon
historical experience and any specific customer collection issues that have been
identified. While such credit losses have historically been within management's
expectations and the provisions established, we cannot guarantee that we will
continue to experience the same credit loss rates that have been experienced in
the past. Our five largest customer balances comprise 24% of our accounts
receivable balance as of February 28, 2022. A significant change in the
liquidity or financial position of any one of these customers could have a
material adverse impact on the collectability of accounts receivable and our
results of operations.

On March 1, 2020, we adopted Accounting Standards Update ("ASU")
2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments," which did not have a material impact on our
financial statements. Our financial instruments consist of trade receivables
arising from revenue transactions in the ordinary course of business. We extend
credit to customers based on pre-defined criteria and trade receivables are
generally due within 30 to 60 days.

Inventory

We value our inventory at the lower of the actual cost to purchase or the net
realizable value of the inventory. Net realizable value is defined as estimated
selling prices, less cost of completion, disposal, and transportation. We
regularly review inventory quantities on-hand and record a provision in cost of
sales for excess and obsolete inventory based primarily on selling prices,
indications from customers based upon current price negotiations, and purchase
orders. The cost of the inventory is determined primarily on a weighted moving
average basis, with a portion valued at standard cost, which approximates actual
costs on the first in, first out basis. Our industry is characterized by rapid
technological change and frequent new product introductions that could result in
an increase in the amount of obsolete inventory quantities on-hand. In addition,
and as necessary, specific reserves for future known or anticipated events may
be established.

Estimates of excess and obsolete inventory may prove to be inaccurate, in which
case we may have understated or overstated the provision required for excess and
obsolete inventory. Although we make every effort to ensure the accuracy of our
forecasts of future product demand, any significant unanticipated changes in
demand or technological developments could have a significant impact on the
carrying value of inventory and our results of operations.

Intangible Asset Impairments

As of February 28, 2022, intangible assets totaled $101,450. Management makes
estimates and assumptions in preparing the consolidated financial statements for
which actual results will emerge over long periods of time. These estimates and
assumptions are closely monitored by management and periodically adjusted as
circumstances warrant. For instance, the expected lives of indefinite-lived
intangible assets may be shortened or an impairment recorded based upon a change
in the expected use of the asset or performance of the related asset group. At
the present time, management intends to continue the development, marketing and
selling of products associated with its intangible assets, and there are no
known restrictions on the continuation of their use.

In connection with the annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2021, the Company determined that one of its
trademarks in the Consumer Electronics segment was impaired. The impairment was
the result of shortfalls in sales due to reduced demand of the product
category. As a result, an impairment charge of $1,300 was recorded for the year
ended February 28, 2021 (see Note 1(k)). Related long-lived assets were tested
for recoverability and determined to be recoverable and therefore no additional
impairments related to long-lived assets were recorded.

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In connection with the annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2020, the Company determined that several of its
indefinite-lived trademarks in the Consumer Electronics segment, were impaired.
The impairments were the result of the Company being unable to secure product
placement into customer stores, anticipated shortfalls in sales due to economic
uncertainty as a result of the COVID-19 pandemic, reduced demand from a large
traditional brick-and-mortar customer, along with continued declines in the
German economy. As a result, several indefinite-lived tradenames in the Consumer
Electronics segment were impaired resulting in impairment charges of $2,828
recorded for the year ended February 29, 2020 (see Note 1(k)). Related
long-lived assets were tested for recoverability and determined to be
recoverable and therefore no additional impairments related to long-lived assets
were recorded in the Consumer Electronics segment.

In the Biometrics segment, in connection with the annual impairment test for
Fiscal 2020, the Company determined that its indefinite-lived trademark was
impaired. The impairment of the trademark was the result of lack of customer
acceptance of the related technology, lower than anticipated results, adjusted
expectations for demand and anticipated delays of product deployment with target
customers due to economic uncertainty given the COVID-19 pandemic. Related
long-lived assets in the Biometrics segment were tested for recoverability and
determined not to be recoverable. The fair value of the long-lived assets that
were not recoverable were estimated, and when compared to their carrying value,
were determined to also be impaired. As a result, total impairments in the
Biometrics segment of $27,402 for indefinite-lived and definite-lived intangible
assets were recorded for the year ended February 29, 2020 (see Note 1 (k)).

The combined impairment charges for both the Consumer Electronics segment and
the Biometrics segment aggregated $30,230 for fiscal year ended February 29,
2020.

Approximately 38.2% of our indefinite-lived trademarks ($24,079) are at risk of
impairment as of February 28, 2022. When testing indefinite-lived assets for
impairment, we have the option to first assess qualitative factors to determine
whether the existence of events or circumstances leads to a determination that
it is more likely than not that the estimated fair value is less than its
carrying amount. If we elect to perform a qualitative assessment and determine
that an impairment is more likely than not, we are then required to perform the
quantitative impairment test; otherwise, no further analysis is required. Under
the qualitative assessment, we consider various factors, including macroeconomic
conditions, relevant industry and market trends, cost factors, overall financial
performance, other entity-specific events, and events affecting the
indefinite-lived asset that could indicate a potential change in the fair value
of our indefinite-lived assets. We also consider the specific future outlook for
the indefinite-lived asset. We may also elect not to perform the qualitative
assessment and instead, proceed directly to the quantitative impairment test.
The Company uses an income approach, based on the relief from royalty method, to
value indefinite-lived trademarks as part of its quantitative impairment test.
This impairment test involves the use of accounting estimates and assumptions,
changes in which could materially impact our financial condition or operating
performance if actual results differ from such estimates and assumptions. The
critical assumptions in the discounted cash flow model include revenues,
long-term growth rates, royalty rates, and discount rates. Management exercises
judgment in developing these assumptions. Certain of these assumptions are based
upon industry projections, facts specific to the trademarks and consideration of
our long-term view for the trademark and the markets we operate in. If we were
to experience sales declines, a significant change in operating margins which
may impact estimated royalty rates, an increase in our discount rates, and/or a
decrease in our projected long-term growth rates, there would be an increased
risk of impairment of these indefinite-lived trademarks.

The cost of other intangible assets with definite lives and long-lived assets
are amortized on an accelerated or straight-line basis over their respective
lives. Management has determined that the current lives of these assets are
appropriate.

Long-lived assets and certain identifiable intangibles are reviewed for
impairment in accordance with ASC 360 whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. Recoverability of the assets is measured by a comparison of the
carrying value of an asset to future undiscounted net cash flows expected to be
generated by the asset. If the carrying value of these assets are not
recoverable on an undiscounted basis, they are then compared to their estimated
fair market value. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying value of the
assets exceeds the fair value of the assets.

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Voxx's goodwill totaled $74,320 as of February 28, 2022. Goodwill is tested for
impairment as of the last day of each fiscal year at the reporting unit level.
When testing goodwill for impairment, we have the option to first assess
qualitative factors to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the
estimated fair value of a reporting unit is less than its carrying amount. If we
elect to perform a qualitative assessment and determine that an impairment is
more likely than not, we are then required to perform the quantitative
impairment test; otherwise, no further analysis is required. Under the
qualitative assessment, we consider various qualitative factors, including
macroeconomic conditions, relevant industry and market trends, cost factors,
overall financial performance, other entity-specific events, and events
affecting the reporting unit that could indicate a potential change in fair
value of our reporting unit or the composition of its carrying values. We also
consider the specific future outlook for the reporting unit. We also may elect
not to perform the qualitative assessment and instead, proceed directly to the
quantitative impairment test. Application of the goodwill impairment test
requires judgment, including the identification of reporting units, assignment
of assets and liabilities to reporting units, assignment of goodwill to
reporting units, and estimation of the fair value of each reporting unit. Based
on the Company's goodwill impairment assessment, all the reporting units with
goodwill had estimated fair values as of February 28, 2022 that exceeded their
carrying values. As a result of the annual assessment, no impairment charges
were recorded related to goodwill during Fiscal 2022, Fiscal 2021, or Fiscal
2020.

Goodwill allocated to our Klipsch, Invision, Rosen, VSM, DEI, and Onkyo
reporting units was 62.6% ($46,533), 9.9% ($7,372), 1.2% ($880), 0.8% ($572),
2.2% ($1,600), and 23.4% ($17,363), respectively. The fair values of the
Klipsch, Invision, DEI, and Onkyo reporting units are greater than their
carrying values by approximately 53.4% ($26,126), 76.1% ($7,286), 54.7%
($12,022) and 45.7% ($3,228), respectively, as of February 28, 2022. The
quantitative assessment utilizes either an income approach, a market approach,
or a combination of these approaches to determine the fair value of its
reporting units. These approaches have a degree of uncertainty. The income
approach employs a discounted cash flow model to value the reporting unit as
part of its impairment test. This impairment test involves the use of accounting
estimates and assumptions, changes in which could materially impact our
financial condition or operating performance if actual results differ from such
estimates and assumptions. The critical assumptions in the discounted cash flow
model are revenues, operating margins, working capital and a discount rate
(developed using a weighted average cost of capital analysis). Management
exercises judgment in developing these assumptions. Certain of these assumptions
are based upon industry projections, facts specific to the reporting unit,
market participant assumptions and data, and consideration of our long-term view
for the reporting unit and the markets we operate in. The market approach
employs market multiples from guideline public companies operating in our
industry. Estimates of fair value are derived by applying multiples based on
revenue and earnings before interest, taxes, depreciation, and amortization
("EBITDA") adjusted for size and performance metrics relative to peer companies.
If the Klipsch reporting unit were to experience sales declines, sustained
pricing pressures, unfavorable operating margins, lack of new product acceptance
by consumers, changes in consumer trends and preferred shopping channels, less
than anticipated results for the holiday season, a change in the peer group or
performance of the peer companies, an increase to the discount rate, and/or a
decrease in our projected long-term growth rates used in the discounted cash
flow model, there would be an increased risk of goodwill impairment for the
Klipsch reporting unit. If the Invision reporting unit experienced an increase
to the discount rate, a lack or delay in new product acceptance, cancellation,
or reduction in projected volumes from OEM customers, or a change in projected
long-term growth rates used in the discounted cash flow model, there would be an
increased risk of goodwill impairment for the Invision reporting unit. If the
Rosen, VSM, DEI, and Onkyo reporting units experienced an increase to the
discount rate, sales declines, changes in consumer trends, or increases in cost
factors, there would be an increased risk of goodwill impairment for the Rosen,
VSM, and DEI reporting units.

Warranties

We offer warranties of various lengths depending upon the specific product. Our
standard warranties require us to repair or replace defective product returned
by both end users and customers during such warranty period at no cost. We do
not sell extended warranties. We record an estimate for warranty related costs
in cost of sales, based upon historical experience of actual warranty claims and
current information on repair costs and contract terms with certain
manufacturers. While warranty costs have historically been within expectations
and the provisions established, we cannot guarantee that we will continue to
experience the same warranty return rates or repair costs that have been
experienced in the past. A significant increase in product return rates, or a
significant increase in the costs to repair products, could have a material
adverse impact on our operating results.

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Income Taxes

We account for income taxes in accordance with the guidance issued under
Statement ASC 740, "Income Taxes" ("ASC 740") with consideration for uncertain
tax positions.  We record a valuation allowance to reduce our deferred tax
assets to the amount of future tax benefit that is more likely than not to be
realized.

Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying values of
existing assets and liabilities and their respective tax basis and operating
loss and tax credit carryforwards. In evaluating our ability to recover our
deferred tax assets within the jurisdiction from which they arise, we consider
all positive and negative evidence including the results of recent operations,
scheduled reversal of deferred tax liabilities, future taxable income, and tax
planning strategies. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled (see Note
8). The effect on deferred tax assets and liabilities from a change in tax rates
is recognized in income in the period that includes the enactment date.

The Company accounts for uncertain tax positions in accordance with the
authoritative guidance issued under ASC 740, which addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should
be recorded in the financial statements. The Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities
based on the technical merits of the position. The tax benefits recognized in
the financial statements from such position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. The Company provides loss contingencies for
federal, state, and international tax matters relating to potential tax
examination issues, planning initiatives and compliance responsibilities. The
development of these reserves requires judgments about tax issues, potential
outcomes, and timing, which if different, may materially impact the Company's
financial condition and results of operations. The Company classifies interest
and penalties associated with income taxes as a component of Income tax expense
(benefit) on the Consolidated Statements of Operations and Comprehensive (Loss)
Income.

Results of Operations

Included in Item 8 of this annual report on Form 10-K are the Consolidated
Balance Sheets as of February 28, 2022 and February 28, 2021 and the
Consolidated Statements of Operations and Comprehensive (Loss) Income,
Consolidated Statements of Stockholders' Equity and Consolidated Statements of
Cash Flows for the years ended February 28, 2022, February 28, 2021 and
February 29, 2020. In order to provide the reader meaningful comparisons, the
following analysis provides comparisons of the audited year ended February 28,
2022 with the audited year ended February 28, 2021, and the audited year ended
February 28, 2021 with the audited year ended February 29, 2020. We analyze and
explain the differences between periods in the specific line items of the
Consolidated Statements of Operations and Comprehensive (Loss) Income.

Year Ended February 28, 2022 Compared to the Years Ended February 28, 2021 and February 29, 2020

Continuing Operations

The tables presented in this section set forth, for the periods indicated,
certain Statement of Operations data for the years ended February 28, 2022
("Fiscal 2022"), February 28, 2021 ("Fiscal 2021") and February 29, 2020
("Fiscal 2020").

Net Sales

                          Fiscal        Fiscal        Fiscal
                           2022          2021          2020
Automotive Electronics   $ 200,594     $ 163,903     $ 114,154
Consumer Electronics       433,925       398,263       279,675
Biometrics                     882           836           461
Corporate                      519           603           599
Total net sales          $ 635,920     $ 563,605     $ 394,889


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Fiscal 2022 compared to Fiscal 2021

Automotive Electronics sales, which include both OEM and aftermarket automotive
electronics, represented 31.5% of the net sales for the year ended February 28,
2022, compared to 29.1% in the prior year and increased $36,691 for the year
ended February 28, 2022 as compared to the prior year. The primary driver of the
sales increase in this segment was sales of aftermarket security products
related to the Company's DEI subsidiary, established in connection with the
Company's acquisition in July 2020. These sales increased approximately $18,600
for the year ended February 28, 2022 to a total of approximately $66,700, as a
result of twelve full months of sales included for Fiscal 2022 as compared to
five months during the comparable Fiscal 2021 year. The Company's OEM rear seat
entertainment sales experienced a net increase of approximately $13,300 during
the year ended February 28, 2022, primarily as a result of the start of new rear
seat entertainment programs with Stellantis, Ford, and Nissan that were not
present in the prior year. This was offset by a decline in sales for one of the
Company's rear-seat entertainment programs that ended during Fiscal 2022, as
well as delays resulting from the global chip shortage. Sales of OEM automotive
safety electronics also increased approximately $4,900 for the year ended
February 28, 2022, as a result of rebounding sales following the COVID-19
shut-downs of automotive manufacturers. In addition, the Company's aftermarket
security products, which include aftermarket remote starts, and aftermarket rear
seat entertainment products increased by approximately $1,300 and $1,100,
respectively, for the year ended February 28, 2022, due to rebounding sales
following the prior year COVID-19 shut-downs, as well as due to current year
component shortages that caused some customers to purchase product earlier in
order to avoid future stock outages. Finally, sales of aftermarket accessory
products increased approximately $1,100 for the year ended February 28, 2022 due
to the successful launch of new soundbars for club cars during the second
quarter of the fiscal year. As an offset to these increases, the Company
experienced a decrease in sales of satellite radio products during the year
ended February 28, 2022 of approximately $2,200, as a result of inventory
shortages, which have negatively affected the Company's ability to fulfill
orders. Sales of OEM security products also declined approximately $2,000 as a
result of chip shortages and the end of one if the Company's customer remote
start programs. Finally, the Company experienced a decline in sales of
aftermarket safety products of approximately $1,100 due primarily to low
inventories of vehicles in which these products are generally installed.

Consumer Electronics sales represented 68.2% of net sales for the year ended
February 28, 2022 as compared to 70.7% in the prior year and increased $35,662
for the year ended February 28, 2022 as compared to the year ended February 28,
2021. The Company's 11TC subsidiary contributed to an increase in sales of
approximately $45,700 for the year ended February 28, 2022 to a total of
approximately $59,400. 11TC began selling Onkyo and Pioneer products through
distribution agreements during the third quarter of Fiscal 2021 and during the
third quarter of Fiscal 2022, the Company completed an acquisition of certain
assets of the Onkyo Home Entertainment business with its joint venture partner,
resulting in the establishment of the Company's Onkyo subsidiary. Sales of Onkyo
and Pioneer products under the distribution agreements were only present for
three months during the prior year period. Within Europe, the Company
experienced net increases in its premium audio product and accessories sales of
approximately $3,800 as a result of improved online sales, improved export
business sales, and better product mix, as well as due to the partial lifting of
COVID-19 restrictions during the year ended February 28, 2022, although some
restrictions were still noted to be in place during Fiscal 2022. This was offset
by sales declines resulting from the absence of trade shows and the loss of
certain customer connections due to remaining COVID-19 restrictions that have
prevented in-person sales and meetings. The Company also experienced
improvements of approximately $1,700 related to wireless accessory speakers
during the year ended February 28, 2022, due to the rebound in sales following
nationwide COVID-19 brick and mortar business closures and delayed customer
orders during the year ended February 28, 2021. Offsetting these increases, the
Company experienced declining sales of accessory products, which include hook-up
and reception products, totaling approximately $9,600 during the year ended
February 28, 2022, as several of these products saw an increase during the
comparable prior year period due to the significant number of people working
from home during the COVID-19 pandemic. During Fiscal 2022, sales of these
products have returned to pre-COVID levels. Additionally, sales of premium
wireless speaker products decreased approximately $4,900 during the year ended
February 28, 2022 primarily as a result of chip shortages that have caused
product backorders, vendor delays, and shipping container and vessel shortages,
as well as due to large load in sales of speaker products at warehouse club
channels during the year ended February 28, 2021 that did not repeat in the
current year. Finally, sales of premium mobility products decreased
approximately $2,100 due to many discounted, end of life products sold during
Fiscal 2022 in comparison to the prior year when these products were

                                       35

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newer to the market and selling at higher prices. New lines of mobility products have been delayed as a result of product, vendor, and shipping delays.

Biometrics represented 0.1% of our net sales for both of the years ended
February 28, 2022 and February 28, 2021 and sales increased in the segment by
$46 for the year ended February 28, 2022 as compared to the prior year. Sales
for the year ended February 28, 2022 have increased due to product mix,
including sales of the NIXT product, which the Company began selling during the
second half of Fiscal 2021. The NIXT product can be optionally fitted with
iTEMP, a product that can take an individual's temperature before allowing iris
access. During Fiscal 2022, the Company has also begun selling NIXT, iTemp, and
NEXT products under the distribution agreement signed with GalvanEyes LLC in
April 2021.

Fiscal 2021 compared to Fiscal 2020

Automotive Electronics sales, which include both OEM and aftermarket automotive
electronics, represented 29.1% of the net sales for the year ended February 28,
2021, compared to 28.9% in the prior year. Sales in this segment increased
$49,749 for the year ended February 28, 2021, as compared to the prior year. The
primary driver of sales increases in this segment was sales of OEM and
aftermarket products related to the Company's VSM and DEI subsidiaries,
established in connection with the Company's acquisitions in the fourth quarter
of Fiscal 2020 and the second quarter of Fiscal 2021, respectively. Sales from
these two new subsidiaries totaled approximately $71,000 and comprised
approximately 43% of the segment's sales for the year ended February 28, 2021.
In the prior year, the Company's VSM subsidiary contributed approximately $2,300
of sales to the Automotive Electronics segment. The Company also saw an increase
in sales of its aftermarket security and remote start products of approximately
$3,600 during the year ended February 28, 2021, partly due to a boost in demand
following business re-openings after the COVID-19 shut-downs, as purchases could
not be made by customers during the shutdowns. Offsetting these increases, the
segment experienced sales declines in certain product lines during the year
ended February 28, 2021 related to the COVID-19 pandemic, as well as certain
other factors. The Company experienced a net decrease in sales of OEM rear seat
entertainment products totaling approximately $10,300 due to several automotive
manufacturing plant shut-downs beginning in March 2020 as a result of COVID-19,
including Ford, GM, FCA, and Subaru. Many plants began to gradually re-open
during the second quarter of our fiscal year, and while some of the programs
have begun to ramp up production again, others have yet to return to pre-COVID
levels, thus negatively impacting sales for the year. Additionally, OEM rear
seat entertainment sales were negatively impacted during the year ended February
28, 2021 by the cancellation of a program with one of the Company's larger
customers that had been in production during the prior year. This was partially
offset by the successful launch of a new program with a customer in October
2020. The Company's OEM remote start sales decreased approximately $6,200 during
the year ended February 28, 2021 as a result of an increase in the use of Tier 1
factory installed remote start products by many automotive manufacturers (which
the Company does not sell) over accessory level remote starts. This has
negatively impacted the Company's sales to certain of its OEM remote start
customers. Sales of aftermarket rear seat entertainment products also decreased
during the year ended February 28, 2021 by approximately $2,700 due to the
COVID-19 related shutdowns of car dealerships and other brick and mortar
businesses during the first quarter of the year, followed by stock-outages of
several products, which continued to negatively impact sales through the
remainder of the fiscal year. Finally, satellite radio fulfillment sales
decreased approximately $900 during the year ended February 28, 2021 both as a
result of business shut-downs during COVID-19, as well as due to the fact that
most new vehicles include this product as a standard option.

Consumer Electronics sales represented 70.7% of net sales for the year ended
February 28, 2021 as compared to 70.8% in the prior year. Sales increased
$118,588 for the year ended February 28, 2021 as compared to the prior year due
primarily to the positive sales and promotion of several of the Company's
premium audio products. During Fiscal 2021, the Company experienced greater
consumer demand and achieved market share growth in its premium home theater,
subwoofer, and premium wireless categories, launching a new premium wireless
computer speaker system and selling many of its products through warehouse club
channels, as well as through online platforms, which resulted in an increase of
approximately $118,400 in sales for the year ended February 28, 2021. The
Company's newly formed subsidiary, 11 Trading Company LLC, also began selling
Onkyo and Pioneer products through new distribution agreements during the third
quarter of the fiscal year, contributing to an increase of approximately $13,700
in sales for the year ended February 28, 2021. Within Europe, the Company
experienced stronger online sales during year ended February 28, 2021 of
approximately $6,300 due to many consumers shopping from home during the
COVID-19 pandemic, as well as an increase in sales in its Do It Yourself ("DIY")
line of products, a new sales channel of discount retailers, and a shift in
focus of premium audio products in Europe

                                       36
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from low margin to traditional home theater products. Offsetting these sales
increases were decreases in sales related to the COVID-19 pandemic, as well as
other factors. The Company experienced decreases in sales of approximately
$12,200 in certain consumer electronic and accessory products for the year ended
February 28, 2021, such as reception products, remotes, wireless speakers, and
other power products, primarily due to nationwide brick and mortar business
closures and delayed customer orders related to the COVID-19 pandemic, as well
as due to the Company's continuing rationalization of SKUs for certain of these
products, with the goal of limiting sales of lower margin products. There was
also a decrease in sales of the Company's premium commercial speaker products of
approximately $3,100 due to the shut-down of cinemas during the pandemic.
Additionally, the Company experienced a decrease in sales of its motion products
during the year ended February 28, 2021 of approximately $2,700, as one of the
Company's healthcare programs ended during the fiscal year, and there was a
decrease in sales of smart home security products of approximately $800, as the
Company began exiting this category during Fiscal 2020. Finally, product sales
in the Company's rest of world locations declined approximately $700 as a result
of the COVID-19 pandemic due to overseas lockdowns and customer order delays and
cancellations.

Biometrics represented 0.1% of our net sales for both of the years ended
February 28, 2021 and February 29, 2020 and sales increased in the segment by
$375 for the year ended February 28, 2021 as compared to the prior year. This
segment experienced an increase in product sales for the year ended February 28,
2021 due to increased sales of its EXT outdoor perimeter access product, and the
updated version of its Nano NXT perimeter access product, both of which launched
in the second quarter of Fiscal 2020. Additionally, the Company began selling
its NIXT product during the year ended February 28, 2021, which can be
optionally fitted with iTEMP, a product that can take an individual's
temperature before allowing iris access.

Gross Profit and Gross Margin Percentage

                          Fiscal        Fiscal        Fiscal
                           2022          2021          2020

Automotive Electronics $ 47,296 $ 39,296 $ 23,131

                              23.6 %        24.0 %        20.3 %

Consumer Electronics 121,511 118,866 86,588

                              28.0 %        29.8 %        31.0 %
Biometrics                     185          (191 )        (160 )
                              21.0 %       -22.8 %       -34.7 %
Corporate                      486           576           217
                         $ 169,478     $ 158,547     $ 109,776
                              26.7 %        28.1 %        27.8 %

Fiscal 2022 compared to Fiscal 2021

Gross margins in the Automotive Electronics segment decreased 40 basis points
for the year ended February 28, 2022. The increased cost of materials and
shipping, as well as increases in tariffs included in cost of goods sold, have
negatively affected margins during the year ended February 28, 2022 for such
items as OEM rear seat entertainment, OEM and aftermarket automotive safety
products, and aftermarket accessory products, which the Company has been
actively working to mitigate through a combination of sales price adjustments
and other sourcing strategies, as such supply chain issues are expected to
continue into Fiscal 2023. Additionally, certain new OEM rear seat entertainment
products that began selling during the year ended February 28, 2022, and that
have positively contributed to sales during the year, have generated lower
margins than are normally achieved in this segment. Offsetting these negative
margin impacts, sales of aftermarket security products related to the Company's
DEI subsidiary, whose products have higher profit margins than those typically
achieved by the segment, have contributed positively to margins during the year
ended February 28, 2022. Sales from DEI were present in the prior year period
for only five months, as it was established in July 2020, and therefore these
sales increased significantly for the year ended February 28, 2022 as compared
the prior year. The decrease in sales of satellite radio products for the year
ended February 28, 2022, which typically generate lower margins for the Company,
also contributed positively to margins overall.

Gross margins in the Consumer Electronics segment decreased 180 basis points for
the year ended February 28, 2022 compared to the prior year. The primary driver
of the decline during the year ended February 28, 2022 has

                                       37
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been significant increases to container costs and surcharges affecting cost of
sales for many of the products within the segment, which the Company is actively
working to mitigate through pricing adjustments and other sourcing strategies,
as such supply chain issues are expected to continue into Fiscal 2023.
Offsetting these negative margin impacts, sales from the Company's 11 Trading
Company subsidiary positively impacted margins for the year, as these sales were
present for only three months of the prior year comparable period and have
therefore increased significantly for the year ended February 28, 2022. In
addition, the Company saw declines in sales of certain of its premium speaker
products sold through warehouse club channels during the year ended February 29,
2022. As these products have been sold at lower margins than those typically
associated with the Company's premium audio products, the decline in sales have
contributed positively to the segment's margins for the year ended February 28,
2022.

Gross margins in the Biometrics segment improved for the year ended February 28,
2022 compared to the prior year. During the year ended February 28, 2021, the
Company reduced pricing on many products, which helped generate sales in the
prior year, but resulted in lower margins for the segment. Additionally, the
Company incurred more tooling and effective repair costs during the year ended
February 28, 2021 as compared to the current year, as well as incurred inventory
obsolescence charges for certain products, which contributed negatively to
margins in the prior year.

Fiscal 2021 compared to Fiscal 2020

Gross margins in the Automotive Electronics segment increased 370 basis points
for the year ended February 28, 2021. The primary driver of the margin increases
in this segment has been sales of OEM and aftermarket products related to the
Company's VSM and DEI subsidiaries, whose products have higher profit margins
than those typically achieved by the segment. DEI's sales were not present in
the prior year, and VSM contributed to sales for one month of Fiscal 2020, or 2%
of the segment's sales. The increase in sales of higher margin aftermarket
remote start and security products also contributed positively to the segment's
margins during the year ended February 28, 2021. Offsetting these positive
impacts, the decline in sales of higher margin OEM security and remote start
products during the year ended February 28, 2021, due to the shift in demand
from accessory level remote starts to production level, factory installed remote
starts, caused a decline in margins. In addition, there was a decline in
aftermarket headrest sales during the year ended February 28, 2021, which
typically generate higher margins for the segment and thus had a negative impact
on margins for the year.

Gross margins in the Consumer Electronics segment decreased 120 basis points for
the year ended February 28, 2021 compared to the prior year. Margin declines
during the year ended February 28, 2021 were primarily driven by the Company's
newest line of premium wireless computer speakers, as well as other premium
audio products sold through warehouse club channels, which have contributed
positively to sales, but have been sold at lower margins than those typically
associated with the Company's premium wireless speaker products. The Company's
premium headphone margins also negatively impacted the segment's overall margins
during the year ended February 28, 2021 due to close out sales of certain older
products in preparation for the launch of its newest line of wireless earbuds,
which contributed to an increase in sales of these product, but a decline in the
margins. Additionally, although sales in Europe have increased during the year
ended February 28, 2021, the increase in sales generated from a new sales
channel of discount retail customers has generated lower margins and has had a
negative impact on the year. As an offset to these negative impacts, the segment
has experienced margin increases during the year ended February 28, 2021 due to
factors including a shift in focus of premium audio products in Europe from low
margin to traditional home theater products. Additionally, while the Company
experienced decreases in sales of certain product lines during the year ended
February 28, 2021, such as reception products and remotes, the margins earned on
these products improved as compared to the prior year due to the movement of
production out of China.

Gross margins in the Biometrics segment improved for the year ended February 28,
2021 compared to the prior year. The increase in margins for the year ended
February 28, 2021 was primarily a result of prior year events that negatively
impacted the segment's margins in Fiscal 2020. Certain tooling and defective
repair costs incurred during the year ended February 29, 2020, as well as the
provision of beta samples to certain customers at no cost during the prior year,
negatively impacted Fiscal 2020 margins. A large sale made at a loss during the
year ended February 29, 2020 also caused lower margins in the prior year. During
the year ended February 28, 2021, the Company provided more onsite and remote
support to customers, which generates higher margins for the segment. Offsetting
these positive margin impacts for the year ended February 28, 2021 has been the
reduction in pricing on certain products, which has helped to drive higher sales
in Fiscal 2021 but has resulted in lower margins for the segment. In addition,

                                       38
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the release of inventory reserves in the prior year had a positive impact on the
segment's gross margin in Fiscal 2020, thus negatively impacting the current
year margin comparisons.

Operating Expenses

                                       Fiscal        Fiscal        Fiscal
                                        2022          2021          2020
Operating Expenses:
Selling                               $  50,507     $  43,786     $  39,319
General and administrative               75,955        69,798        68,873

Engineering and technical support 31,540 20,897 21,602 Acquisition costs

                         3,552           287            55
Intangible asset impairment charges           -         1,300        30,230
Total Operating Expenses              $ 161,554     $ 136,068     $ 160,079

Fiscal 2022 compared to Fiscal 2021

The Company experienced an overall increase in operating expenses of $25,486 for Fiscal 2022 as compared to Fiscal 2021.

For the year ended February 28, 2022, selling expenses increased $6,721. This
increase was primarily attributable to higher salary expenses during the year
ended February 28, 2022, as compared to the prior year. Salary and related
payroll expenses increased approximately $4,000 due primarily to the additional
headcount created by the September 2021 and July 2020 acquisitions resulting in
the establishment of the Company's Onkyo and DEI subsidiaries, respectively, as
well as new hires related to the 11 Trading Company and Australia PAC
subsidiaries established in the second quarter of Fiscal 2021 and first quarter
of Fiscal 2022, respectively. Salary expense also increased as a result of the
absence of COVID-19 related furloughs that were present in the comparable prior
year. Advertising expenses and web fees increased approximately $1,600 for the
year ended February 28, 2022, due to increased advertising, promotions, and
social media presence in response to higher online traffic and sales, the
lifting of COVID-19 related cost cutting measures, as well as due to the
increased price of web advertising compared to the prior year. Credit card fees
increased approximately $700 during the year ended February 28, 2022, due
primarily to sales generated by the Company's new DEI subsidiary, as its
telematic subscription sales are paid by customers through credit card
transactions. Additionally, a larger number of customers have gradually begun
using credit cards to pay for orders than in prior periods across the entire
Company. The Company also saw an increase in commission expense of approximately
$500, as a result of the increase in the Company's sales for the year ended
February 28, 2022 as compared to prior year. Finally, the Company experienced an
increase in travel expenses for the year ended February 28, 2022 of
approximately $500 due to the lifting of some of the Company's COVID-19 related
restrictions which have allowed salesmen to begin traveling to customer sites
again. Offsetting these increases in selling expenses for the year ended
February 28, 2022 was a decrease in trade show expenses of approximately $500,
as some trade shows have continued to be either cancelled or held virtually due
to the COVID-19 pandemic and only began to return to in person attendance during
the second half of Fiscal 2022, where the Company had lower spending and smaller
booths for the first year post-COVID.

General and administrative expenses increased $6,157 during the year ended
February 28, 2022, as compared to the prior year period. Professional fees
increased approximately $3,100 for the year ended February 28, 2022 due to
increased litigation fees related primarily to an arbitration case, as well as
consulting fees related to the EyeLock distribution agreement with GalvanEyes
LLC, and legal and professional fees related to the Company's newest 11 Trading
Company and Australia PAC subsidiaries established in the second quarter of
Fiscal 2021 and the first quarter of Fiscal 2022, respectively. Professional
fees were also higher during the year ended February 28, 2022, due to the
lifting of many COVID-19 related restrictions, as both the Company and many of
its professional service providers had temporary office closures during the year
ended February 28, 2021, or provided fee concessions as a result of the pandemic
that did not repeat in the current year. Office and occupancy expenses increased
approximately $1,700 in total for the year ended February 28, 2022, due to costs
related to the Company's new Onkyo subsidiary resulting from the September 2021
acquisition and a full year of DEI expenses resulting from the July 2020
acquisition. The Company has also returned to normal operations after the
lifting of COVID-19 related restrictions, with all of the Company's locations
open and operating, resulting in further increases to office and

                                       39
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occupancy costs. Depreciation and amortization expense also increased
approximately $1,400 due to additional expense related to the Company's Onkyo
subsidiary and a full year of expense related to DEI. Additionally, bad debt
expense increased approximately $500 for the year ended February 28, 2022 due
primarily to the prior year recovery of a receivable balance that did not recur
in the current year. Finally, insurance expense, as well as fees related to
taxes and licensing both increased approximately $200 each during the year ended
February 28, 2022 due to the establishment of Company's Onkyo subsidiary in
September 2021, as well as the DEI, 11 Trading Company, and PAC Australia
subsidiaries, and additional licenses obtained and higher insurance premiums
incurred related to cyber security. As an offset to these increases in general
and administrative expense, the Company experienced a decrease in salary and
related payroll expenses of approximately $1,200 during the year ended February
28, 2022, due primarily to lower bonus accruals as compared to the prior year
based on Company profitability.

Engineering and technical support expenses increased $10,643 for the year ended
February 28, 2022, as compared to the prior year period. The Company experienced
an increase in direct labor and related payroll tax expense of approximately
$6,400 for the year ended February 28, 2022, as a result of additional headcount
created by the July 2020 and September 2021 acquisitions resulting in the
establishment of the Company's DEI and Onkyo subsidiaries, respectively, as well
as due to higher reimbursement of engineering labor expense in the prior year,
and the absence of Company-wide furloughs that were in place during the year
ended February 28, 2021. The Company also experienced a net increase in research
and development expense of approximately $4,200 for the year ended February 28,
2022, primarily as a result of the Company's product development projects
related to its new Onkyo subsidiary in the Consumer Electronics segment, and
within the Automotive Electronics segment related to projects for Stellantis and
Ford, as well as due to additional headcount within the Biometrics segment. This
was offset by decreases related to certain Consumer Electronics projects in
development during the prior year that have been completed.

Acquisition costs increased $3,265 for the year ended February 28, 2022, as
compared to the prior year. During the year ended February 28, 2022, acquisition
costs incurred were related to consulting and due diligence fees for the asset
purchase agreement signed with Onkyo Home Entertainment Corporation and the
joint venture created with Sharp Corporation to complete the transaction. This
transaction was completed on September 8, 2021. In the prior year, acquisition
costs incurred were related to the Company's VSHC and DEI acquisitions,
completed in January 2020 and July 2020, respectively.

In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2021, the Company determined that one of its
trademarks in the Consumer Electronics segment was impaired. The impairment was
the result of shortfalls in sales due to reduced demand of the product
category. As a result, an impairment charge of $1,300 was recorded for the year
ended February 28, 2021.

Fiscal 2021 compared to Fiscal 2020

The Company experienced an overall decrease in operating expenses of $24,011 for
Fiscal 2021 as compared to Fiscal 2020; however, in the absence of intangible
asset impairment charges in both years, operating expenses would have increased
by $4,919.

Selling expenses have increased $4,467 for the year ended February 28,
2021. This increase was primarily due to increased commission expense of
approximately $4,600 as a result of higher sales for the fiscal year. A net
increase in salary expense of approximately $1,200 was due to the additional
headcount created by acquisitions resulting in the establishment of the VSM and
DEI subsidiaries in the fourth quarter of Fiscal 2020 and the second quarter of
Fiscal 2021, respectively, as well as additional hires related to the Company's
new 11 Trading Company subsidiary related to distribution agreements for Onkyo
and Pioneer products. This was slightly offset by the furlough of certain
employees during the fiscal year due to the COVID-19 pandemic. Web advertising
and platform expenses increased approximately $1,800 for the year ended February
28, 2021 due to an increase in online traffic, with many consumers working and
shopping from home during the mandatory quarantines and business shutdowns
throughout the country as a result of the pandemic. Additionally, credit card
fees increased approximately $600 primarily as a result of the Company's DEI
subsidiary, established in connection with the Company's acquisition in the
second quarter of Fiscal 2021, whose subscription sales are transacted online.
Offsetting these increases in selling expenses for the year ended February 28,
2021 were decreases due to factors directly related to the COVID-19 pandemic,
which resulted in the temporary shut-down of many brick and mortar stores and
mandatory quarantine orders during the first quarter of our Fiscal 2021 year,
with phased re-openings taking place beginning in the second quarter through the
remainder of our fiscal year. The elimination of all non-essential travel
Company-wide resulted in a

                                       40

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decrease in travel and entertainment expenses of approximately $1,700. Additionally, trade show expenses decreased approximately $1,800 as all events were either cancelled or held virtually due to COVID-19.

General and administrative expenses increased $925 during the year ended
February 28, 2021. Increases in general and administrative expenses were due in
part to a net increase in salary expense of approximately $3,300 during the
fiscal year. Salary increases were due to higher bonus accruals as a result of
the positive performance of the Company for the year ended February 28, 2021, as
well as due to increased headcount resulting from the Company's new DEI and VSM
subsidiaries established in the fourth quarter of Fiscal 2020 and the second
quarter of Fiscal 2021, respectively. This was offset by the furlough of certain
employees during the year ended February 28, 2021, as well as due to the prior
year grant of 200,000 fully vested shares of Class A Common Stock to the
Company's Chief Executive Officer in accordance with his employment agreement,
which resulted in compensation expense of approximately $800 for the year ended
February 29, 2020 that did not repeat in the current fiscal year. Professional
fees also increased by approximately $1,000 as a result of certain professional
services provided in connection with the establishment of the Company's new DEI
and VSM subsidiaries, and insurance expense increased approximately $400 as a
result of the deductible related to an IT security incident in the second
quarter of the fiscal year, as well as due to the Company's new VSM, DEI, and 11
Trading Company LLC subsidiaries. As an offset to these general and
administrative expense increases were decreases related to the COVID-19
pandemic, as well as other factors. Depreciation and amortization expense
decreased approximately $1,300, net, for the year ended February 28, 2021 as a
result of the impairment of certain definite-lived intangible assets at EyeLock
in Fiscal 2020, which reduced the amortizable base of these assets. This was
offset by increases in depreciation and amortization expense related to newly
acquired tangible and intangible assets within the VSM and DEI subsidiaries. Bad
debt expense decreased approximately $1,100 as a result of the prior year
reserves of certain customers who filed bankruptcy, which did not repeat in the
current year, as well as due to the recovery of certain balances during the year
ended February 28, 2021 that were previously written off. The elimination of all
non-essential travel as a result of the COVID-19 pandemic resulted in travel and
entertainment expense decreases of approximately $900 for the year ended
February 28, 2021. Additionally, office and occupancy expenses decreased
approximately $700 due to lower overhead, as certain of the Company's offices
were shut down during the first and second quarters of the fiscal year due to
the COVID-19 pandemic, and many re-opened offices have remained at a reduced
capacity through the remainder of the fiscal year.

Engineering and technical support expenses for the year ended February 28, 2021
declined $705 as compared to the prior year. For the year ended February 28,
2021, furloughs and headcount reductions at many of the Company's locations
related to the COVID-19 pandemic resulted in lower labor expenses of
approximately $3,000. The elimination of all non-essential travel as a result of
the pandemic also resulted in travel and entertainment expense decreases of
approximately $500. These decreases were offset by increases in labor of
approximately $2,600 as a result of the Company's new VSM and DEI subsidiaries
established in connection with the Company's acquisitions in the fourth quarter
of Fiscal 2020 and second quarter of Fiscal 2021, respectively.

Acquisition costs were $287 for the year ended February 28, 2021, as compared to
$55 for the year ended February 29, 2020. During the year ended February 28,
2021, acquisition costs incurred were related to legal and consulting fees
related to the Company's DEI acquisition, completed in July 2020, as well as
fees related to the VSHC acquisition that was completed in January 2020. For the
year ended February 29, 2020, acquisition costs were related solely to the
Company's January 2020 VSHC acquisition.

In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2021, the Company determined that one of its
trademarks in the Consumer Electronics segment was impaired. The impairment was
the result of shortfalls in sales due to reduced demand of the product
category. As a result, an impairment charge of $1,300 was recorded for the year
ended February 28, 2021.

                                       41
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In connection with its annual impairment test performed as of the last day of
the fourth quarter of Fiscal 2020, the Company determined that several of its
indefinite-lived intangible assets within the Consumer Electronics segment, as
well as certain indefinite-lived and definite-lived intangible assets within the
Biometrics segment were impaired. The impairments within the Consumer
Electronics segment were the result of the Company being unable to secure
product placement into customer stores, anticipated shortfalls in sales due to
economic uncertainty as a result of the COVID-19 pandemic, reduced demand from a
large traditional brick-and-mortar customer, along with continued declines in
the German economy. The impairments within the Biometrics segment were the
result of lack of customer acceptance of the related technology, lower than
anticipated results, adjusted expectations for demand, and anticipated delays of
product deployment with target customers due to economic uncertainty related to
the COVID-19 pandemic. The Company recorded total impairment charges of $30,230
for the year ended February 29, 2020 related to these impairments.

Other (Expense)Income

                                       Fiscal        Fiscal       Fiscal
                                        2022          2021         2020
Interest and bank charges             $  (2,532 )   $ (2,979 )   $ (2,975 )

Equity in income of equity investee 7,890 7,350 5,174 Interim arbitration award

               (39,444 )          -            -
Gain on sale of real property                 -            -        4,057
Investment gain                               -           42          775
Other, net                                  323          746        2,332

Total other (expense) income $ (33,763 ) $ 5,159 $ 9,363

Fiscal 2022 compared to Fiscal 2021

Interest and bank charges represent interest expense and fees related to the
Company's bank obligations, supply chain financing and factoring agreements,
interest related to finance leases, and amortization of debt issuance costs.
During the first quarter of Fiscal 2021, the Company made a precautionary
borrowing from the Credit Facility of $20,000 related to COVID-19 pandemic
concerns. This balance was repaid during the third quarter of Fiscal 2021 and
there has been no balance outstanding during the year ended February 28, 2022.
This resulted in a decrease in interest expense related to the Credit Facility
of $326 for the year ended February 28, 2022 as compared to the prior year. In
addition, interest expense was lower during the year ended February 28, 2022 due
to the amendment of the Company's Credit Facility in April 2021, which resulted
in a decrease in amortization of debt issuance costs of $298 for the year ended
February 28, 2022 as compared to the prior year. As an offset to these decreases
in interest expense, the Company's new Onkyo subsidiary entered into a
shareholder loan payable to the Company's joint venture partner, Sharp, during
the third quarter of Fiscal 2022, for which interest expense was incurred during
the year ended February 28, 2022 that was not present in the prior year.

Equity in income of equity investee represents the Company's share of income
from its 50% non-controlling ownership interest in ASA Electronics LLC and
Subsidiaries ("ASA"). The increase in income for the year ended February 28,
2022 is due to an increase in ASA net income resulting from improved sales
across all of its markets due primarily to the lifting of COVID-19 restrictions
on customers and end consumers and an increase in demand for product, offset by
an increase in both ocean and air freight costs.

For the year ended February 28, 2022, the Company has recorded a charge of
$39,444 related to an unfavorable interim arbitration settlement award relating
to a breach of contract claim brought against the Company by Seaguard
Electronics LLC for a contractual arrangement entered in 2007 for the purchase
of products and back-end services. The Company is reviewing its legal options
and has moved in the arbitration proceeding to modify the interim award.

During the year ended February 28, 2021, a final pay-out of $42 was received
representing proceeds from the Fiscal 2018 sale of the Company's investment in a
non-controlled corporation, consisting of shares of the investee's preferred
stock, as a portion of the proceeds had been held back at the time of sale. The
payment was recorded as an investment gain for the year ended February 28, 2021.

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Other, net includes net foreign currency gains or losses, interest income,
rental income, and other miscellaneous income and expense. Other, net decreased
for the year ended February 28, 2022. During the year ended February 28, 2021,
the Company received proceeds from a life insurance policy in the amount of $420
related to an executive who passed away during the first quarter of Fiscal 2021,
which was not present in Fiscal 2022.

Fiscal 2021 compared to Fiscal 2020

Interest and bank charges represent expenses for the Company's bank obligations
and supply chain financing arrangements, interest related to finance leases, and
amortization of deferred financing costs. Interest and bank charges were
relatively flat comparing the year ended February 28, 2021 to the prior year.
During the second half of Fiscal 2020, the Company repaid the entire outstanding
balance of its asset-based lending facility in Germany, thus eliminating the
interest expense related to this obligation for the year ended February 28,
2021, which was offset by interest paid on the $20,000 precautionary borrowing
from the Company's Credit Facility in Fiscal 2021, which was outstanding from
April 2020 through November 2020.

Equity in income of equity investee represents the Company's share of income
from its 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA").
The increase in income for the year ended February 28, 2021 is due to an
increase in ASA's gross profit, lower overhead, and growth in the RV and marine
markets.

On September 30, 2019, the Company, through its subsidiary Voxx German Holdings
Gmbh (the "Seller"), sold its real property in Pulheim, Germany to CLM S.A. RL
(the "Purchaser") for €10,920. Net proceeds received from the transaction were
approximately $9,500 after transactional costs and repayment of the outstanding
mortgage. Concurrently with the sale, the Seller entered into an operating lease
arrangement with the Purchaser for a small portion of the real property to
continue to operate its sales office in Germany. The transaction qualified for
sale leaseback accounting in accordance with ASC 842 and the Company recognized
a gain on the execution of the sale transaction for the year ended February 29,
2020.

During Fiscal 2018, the Company sold its investment in RxNetworks, a
non-controlled corporation, consisting of shares of the investee's preferred
stock. Voxx recognized a gain during Fiscal 2018 for the sale of this
investment; however, a portion of the cash proceeds were subject to a hold-back
provision, which was not included in the gain recognized in Fiscal 2018. During
the second quarter of Fiscal 2020, the hold-back provision expired, and the
Company received additional proceeds from the sale, recording an investment gain
of $775 for the year ended February 29, 2020. A final payout of $42 received in
November 2020 was recorded as an investment gain for the year ended February 28,
2021. During the fourth quarter of Fiscal 2019, all of the outstanding common
stock of Fathom Systems Inc., a non-controlled corporation in which Voxx was
invested, was repurchased by the investee for a price per share significantly
below the value when issued. This resulted in a loss on Voxx's investment in
Fathom of $530 for the year ended February 28, 2019.

Other, net includes net foreign currency gains or losses, interest income,
rental income, and other miscellaneous income and expense. Other, net decreased
for the year ended February 28, 2021. During the year ended February 28, 2021,
interest income decreased $835 primarily as a result of lower interest rates
applicable to the Company's short term money market investments and lower cash
balances available for investment during the year. Additionally, the Company had
foreign currency losses of $(862) for the year ended February 28, 2021, as
compared to foreign currency gains of $405 for the year ended February 29, 2020.

Income Tax Provision

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES
Act") was enacted in response to the COVID-19 pandemic. Under ASC 740, the
effects of changes in tax rates and laws are recognized in the period in which
the new legislation is enacted. The CARES Act made various tax law changes
including among other things (i) increased the limitation under IRC Section
163(j) for 2019 and 2020 to permit additional expensing of interest; (ii)
enacted technical correction so that qualified improvement property can be
immediately expensed under IRC Section 168(k) (iii) made modifications to the
federal net operating loss rules including permitting federal net operating
losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding
taxable years in order to generate a refund of previously paid income taxes, and
(iv) enhanced recoverability of alternative minimum credit carryforwards. The
CARES Act did not have a material impact on the income tax provision.

                                       43
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During Fiscal 2022, the Company recorded an income tax provision of $1,626
related to federal, state, and foreign taxes. The Company's effective tax rate
of (6.3)% differs from the statutory rate of 21% primarily related to (i) an
increase in valuation allowance as the Company could not conclude that all of
its US deferred tax assets were realizable on a more-likely-than-not basis; (ii)
permanent differences, including the non-controlling interest and a global
intangible low tax income ("GILTI") inclusion; and (iii) state and local
taxes. As of February 28, 2022, the Company continued to maintain a valuation
allowance against certain U.S. and foreign deferred tax assets as the Company
could not conclude that such assets will be realized on a more-likely-than-not
basis. Any decline in the valuation allowance could have a favorable impact on
our income tax provision and net income in the period in which such
determination is made.

During Fiscal 2021, the Company recorded an income tax provision of $4,272
related to federal, state, and foreign taxes. The effective tax rate of 15.5% in
Fiscal 2021 differs from the statutory rate of 21% primarily related to (i)
partial release of its valuation allowance as a result of recent profitability
for which certain of the Company's deferred tax assets became realizable on a
more-likely-than-not basis; (ii) permanent differences, including the
non-controlling interest and a global intangible low tax income ("GILTI")
inclusion; (iii) foreign derived intangible income deduction; and (iv) state and
local taxes. As of February 28, 2021, the Company continued to maintain a
valuation allowance against certain U.S. and foreign deferred tax assets as the
Company could not conclude that such assets will be realized on a
more-likely-than-not basis. Any decline in the valuation allowance could have a
favorable impact on our income tax provision and net income in the period in
which such determination is made.

During Fiscal 2020, the Company recorded an income tax provision of $882 related
to federal, state and foreign taxes. The effective tax rate of (2.2)% in Fiscal
2020 differs from the statutory rate of 21% primarily related to (i) current
year losses for which limited tax benefit was provided; (ii) permanent
differences, including the non-controlling interest and a global intangible low
tax income ("GILTI") inclusion; and (iii) an increase in the valuation allowance
recorded against foreign deferred tax assets. During Fiscal 2020, the Company
maintained a partial and full valuation allowance against certain U.S. and
foreign deferred tax assets as the Company could not conclude that such assets
will be realized on a more-likely-than-not basis. Any decline in the valuation
allowance could have a favorable impact on our income tax provision and net
income in the period in which such determination is made.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are not financial measures recognized by GAAP. EBITDA
represents net (loss) income, computed in accordance with GAAP, before interest
expense and bank charges, taxes, and depreciation and amortization. Adjusted
EBITDA represents EBITDA adjusted for stock-based compensation expense, life
insurance proceeds, certain non-recurring legal and professional fees,
settlements and awards, non-recurring gains, acquisition costs, and impairment
charges. Depreciation, amortization, stock-based compensation, and impairment
charges are non-cash items.

We present EBITDA and Adjusted EBITDA in this Form 10-K because we consider them
to be useful and appropriate supplemental measures of our performance. Adjusted
EBITDA helps us to evaluate our performance without the effects of certain GAAP
calculations that may not have a direct cash impact on our current operating
performance. In addition, the exclusion of certain costs or gains relating to
certain events that occurred during the periods presented allows for a more
meaningful comparison of our results from period-to-period. These non-GAAP
measures, as we define them, are not necessarily comparable to similarly
entitled measures of other companies and may not be an appropriate measure for
performance relative to other companies. EBITDA and Adjusted EBITDA should not
be assessed in isolation from, are not intended to represent, and should not be
considered to be more meaningful measures than, or alternatives to, measures of
operating performance as determined in accordance with GAAP.

                                       44

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  Reconciliation of GAAP Net (Loss) Income Attributable to VOXX International
                   Corporation to EBITDA and Adjusted EBITDA

                                                    Fiscal         Fiscal         Fiscal
                                                     2022           2021           2020
Net (loss) income attributable to VOXX
International Corporation                         $  (22,333 )   $   26,767     $  (26,443 )
Adjustments:
Interest expense and bank charges (1)                  1,825          2,404 

2,476

Depreciation and amortization (1)                     12,053         10,907         11,175
Income tax expense                                     1,626          4,272            882
EBITDA                                                (6,829 )       44,350        (11,910 )
Adjustments:
Stock-based compensation                                 907          1,749          2,282
Life insurance proceeds                                    -           (420 )       (1,000 )
Gain on sale of real property                              -              -         (4,057 )
Settlement of Hirschmann working capital                   -              -            804
Investment gain                                            -            (42 )         (775 )
Acquisition costs                                      3,552            287             55
Non-routine legal fees                                 1,912              -              -
Interim arbitration award                             39,444              -              -
Professional fees related to distribution
agreement with GalvanEyes LLC                            325              -              -
Intangible asset impairment charges (1)                    -          1,300         19,543
Adjusted EBITDA                                   $   39,311     $   47,224     $    4,942

(1) For purposes of calculating Adjusted EBITDA for the Company, interest

expense, bank charges, depreciation and amortization, and intangible asset

impairment charges added back to net (loss) income have been adjusted in

order to exclude the minority interest portion of these expenses attributable

to EyeLock LLC and Onkyo.

Liquidity and Capital Resources

Cash Flows, Commitments and Obligations

As of February 28, 2022, we had working capital of $126,756 which includes cash
and cash equivalents of $27,788 compared with working capital of $172,543 at
February 28, 2021, which included cash and cash equivalents of $59,404. The
accrual of the interim arbitration award is the primary reason for the decrease
in working capital. We plan to utilize our current cash position as well as
collections from accounts receivable, the cash generated from our operations,
when applicable, and the income on our investments to fund the current
operations of the business. However, we may utilize all or a portion of current
capital resources to pursue other business opportunities, including
acquisitions, or to further pay down our debt. The following table summarizes
our cash flow activity for all periods presented:

                                            Year                Year                Year
                                            Ended               Ended               Ended
                                        February 28,        February 28,        February 29,
                                            2022                2021                2020
Cash (used in) provided by:
Operating activities                   $        (2,960 )   $        36,611     $        (1,009 )
Investing activities                           (34,308 )           (13,865 )            (6,709 )
Financing activities                             5,285              (1,940 )           (12,593 )
Effect of exchange rate changes on
cash                                               367               1,173                (500 )
Net (decrease) increase in cash and
cash equivalents                       $       (31,616 )   $        21,979     $       (20,811 )




                                       45

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Net cash used in/provided by operating activities:

Operating activities used cash of $2,960 for Fiscal 2022, due to the increase in
inventory, as well as due to losses incurred by EyeLock LLC. This was offset
primarily by the increase in accounts payable, accrued expenses and current
liabilities (resulting from the interim arbitration award), and accrued sales
incentives, as well as sales increases.

During Fiscal 2021, operating activities provided cash of $36,611, due to
factors including sales increases, as well as increases in accounts payable,
accrued expenses, and accrued sales incentives. This was offset by increases in
inventory and accounts receivable, which were driven by the increases in sales
during the fiscal year, as well as due to losses incurred by EyeLock LLC.

During Fiscal 2020, operating activities used cash of $1,009, due to factors
including sales declines and losses incurred by EyeLock LLC, as well as
decreases in accounts payable, accrued expenses, and accrued sales incentives.
This was offset by decreases in inventory and accounts receivable, which were
driven by the decreases in sales.

Net cash used in/provided by investing activities:

Investing activities used cash of $34,308 during Fiscal 2022, primarily due to
the acquisition of the home audio/video business of Onkyo Home Entertainment
Corporation, as well as capital expenditures.

Investing activities used cash of $13,865 during Fiscal 2021, primarily due to
the acquisition of DEI in July 2020 (see Note 2), as well as capital additions
made by the Company.

Investing activities used cash of $6,709 during Fiscal 2020, primarily due to
the acquisition of VSM in January 2020 (see Note 2), as well as capital
additions made by the Company. This was offset by the proceeds received from the
sale of the Company's real property in Pulheim, Germany (see Note 11).

Net cash used in/provided by financing activities:

Financing activities provided cash of $5,285 during Fiscal 2022, due to proceeds
received from the issuance of shares and long-term debt to the non-controlling
interest of the Company's Onkyo joint venture, as well as borrowings under the
Company's Euro asset-based loan in Germany. This was offset by repayments of
bank debt and finance leases, the purchase of treasury shares, the payment of
withholding taxes on the net issuance of a stock award, and the payment of
deferred finance fees related to the amendment of the Credit Facility in April
2021.

During Fiscal 2021, financing activities used cash of $1,940, primarily due to
the repayment of the Company's precautionary borrowing of $20,000 from the
Credit Facility, payments on the Florida Mortgage, repayments of finance leases,
and the payment of deferred finance fees related to the amendment of the Credit
Facility in Fiscal 2021, offset by the precautionary borrowing of $20,000 made
in April 2020.

During Fiscal 2020, financing activities used cash of $12,593 primarily due to
the repayment of outstanding bank obligations, including the entire outstanding
balance of Voxx Germany's Euro asset-based lending facility, and the repurchase
of shares of the Company's Class A common stock.

The Company has a senior secured credit facility (the "Credit Facility") that
provides for a revolving credit facility with committed availability of up to
$140,000. The Credit Facility also includes a $30,000 sublimit for letters of
credit and a $15,000 sublimit for swingline loans. The availability under the
revolving credit line within the Credit Facility is subject to a borrowing base,
which is based on eligible accounts receivable, eligible inventory and certain
real estate, subject to reserves as determined by the lender, and is also
limited by amounts outstanding under the Florida Mortgage (see Note 7(b)). As of
February 28, 2022, there was no balance outstanding under the revolving credit
facility. The availability under the revolving credit line of the Credit
Facility was $127,486 as of February 28, 2022.

All amounts outstanding under the Credit Facility will mature and become due on
April 19, 2026; however, it is subject to acceleration upon the occurrence of an
Event of Default (as defined in the Credit Agreement). The Company may prepay
any amounts outstanding at any time, subject to payment of certain breakage and
redeployment costs relating to LIBOR Rate Loans. The commitments under the
Credit Facility may be irrevocably reduced at any time, without premium or
penalty, as set forth in the Credit Facility.

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Generally, the Company may designate specific borrowings under the Credit
Facility as either Base Rate Loans or LIBOR Rate Loans, except that swingline
loans may only be designated as Base Rate Loans. Loans under the Credit Facility
designated as LIBOR Rate Loans shall bear interest at a rate equal to the
then-applicable LIBOR Rate plus a range of 1.75% - 2.25%. Loans under the Credit
Facility designated as Base Rate Loans shall bear interest at a rate equal to
the applicable margin for Base Rate Loans of 0.75% - 1.25%, as defined in the
Credit Facility.

Provided that the Company is in a Compliance Period (the period commencing on
that day in which Excess Availability is less than 20% of the Maximum Revolver
Amount and ending on a day in which Excess Availability is equal to or greater
than 20% for any consecutive 30-day period thereafter), the Credit Facility
requires compliance with a financial covenant calculated as of the last day of
each month, consisting of a Fixed Charge Coverage Ratio. The Credit Facility
also contains covenants, subject to defined carveouts, that limit the ability of
the loan parties and certain of their subsidiaries which are not loan parties
to, among other things: (i) incur additional indebtedness; (ii) incur liens;
(iii) merge, consolidate or dispose of a substantial portion of their business;
(iv) transfer or dispose of assets; (v) change their name, organizational
identification number, state or province of organization or organizational
identity; (vi) make any material change in their nature of business; (vii)
prepay or otherwise acquire indebtedness; (viii) cause any Change of Control;
(ix) make any Restricted Junior Payment; (x) change their fiscal year or method
of accounting; (xi) make advances, loans or investments; (xii) enter into or
permit any transaction with an Affiliate of any Borrower or any of their
Subsidiaries; (xiii) use proceeds for certain items; (xiv) issue or sell any of
their stock; or (xv) consign or sell any of their inventory on certain terms. In
addition, if excess availability under the Credit Facility were to fall below
certain specified levels, as defined in the agreement, the lenders would have
the right to assume dominion and control over the Company's cash. As of February
28, 2022, the Company was not in a Compliance Period.

The obligations under the Credit Facility are secured by a general lien on and security interest in substantially all of the assets of the borrowers and certain of the guarantors, including accounts receivable, equipment, real estate, general intangibles, and inventory. The Company has guaranteed the obligations of the borrowers under the Credit Facility.

The Company has a Euro asset-based loan facility in Germany with a credit limit
of €8,000 that expires on July 31, 2023. The Company's subsidiaries Voxx German
Holdings GmbH, Oehlbach Kabel GmbH, and Schwaiger GmbH are authorized to borrow
funds under this facility for working capital purposes.

The Company also utilizes supply chain financing arrangements and factoring
agreements from time to time as a component of its financing for working
capital, which accelerates receivable collection and helps to better manage cash
flow. Under these agreements, the Company has agreed from time to time to sell
certain of its accounts receivable balances to banking institutions who have
agreed to advance amounts equal to the net accounts receivable balances due,
less a discount as set forth in the respective agreements (see Note 1(h)). The
balances under these agreements are accounted for as sales of accounts
receivable, as they are sold without recourse. Cash proceeds from these
agreements are reflected as operating activities included in the change in
accounts receivable in the Company's Consolidated Statements of Cash Flows. Fees
incurred in connection with the agreements are recorded as interest expense by
the Company.

As noted elsewhere in this report, we expect the COVID-19 pandemic may continue
to have an adverse effect on our business. Federal, state, and local governments
have taken a variety of actions to contain the spread of COVID-19. Some
jurisdictions have required restrictions, including temporary business closures,
capacity limitations, and other limitations affecting our operations during
Fiscal 2022. We have proactively taken steps to increase available cash
including, but not limited to, utilizing existing supply chain financing
agreements and amending our Credit Facility in April 2021 in order to both
extend the maturity date of the facility and increase our borrowing capacity.

                                       47

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Material Cash Requirements

The following table summarizes our future material cash requirements from contractual or other obligations at February 28, 2022:

                                                   Amount of Commitment Expiration per Period
                                                       Less than        1-3          4-5         After
Contractual Cash Obligations               Total         1 Year        Years        Years       5 Years
Finance lease obligations (1)            $     302     $      224     $     78     $      -     $      -
Operating lease obligations (1)              4,553          1,255        1,581          705        1,012
Total contractual cash obligations       $   4,855     $    1,479     $  1,659     $    705     $  1,012

Other Commitments
Bank obligations (2)                     $   1,906     $    1,906     $      -     $      -     $      -
Stand-by letters of credit (3)                  50             50            -            -            -
Other (4)                                   11,332            500        1,000        1,000        8,832
Pension obligation (5)                         258              -            -            -          258

Unconditional purchase obligations (6) 174,274 174,274

  -            -            -
Total commercial commitments             $ 187,820     $  176,730     $  1,000     $  1,000     $  9,090
Total Commitments                        $ 192,675     $  178,209     $  2,659     $  1,705     $ 10,102

(1) Represents total principal payments due under finance and operating lease

obligations. Total current balances (included in other current liabilities)

due under finance and operating leases are $224 and $1,255, respectively, at

February 28, 2022. Total long-term balances due under finance and operating

leases are $78 and $3,298, respectively at February 28, 2022.

(2) Represents amounts outstanding under the Company's domestic Credit Facility

and the VOXX Germany asset-based lending facilities at February 28, 2022.

(3) We issue standby letters of credit to secure certain purchases and insurance

requirements. These letters of credit are issued during the ordinary course

of business through major domestic banks as requested by certain suppliers.

(4) This amount represents the outstanding balance of the mortgage for our

manufacturing facility in Florida and the shareholder loan payable to Sharp

at February 28, 2022.

(5) Represents the liability for an employer defined benefit pension plan

covering certain eligible current and former employees of VOXX Germany.

(6) Open purchase obligations represent inventory commitments. These obligations

are not recorded in the consolidated financial statements until commitments

are fulfilled and such obligations are subject to change based on

negotiations with manufacturers.

We regularly review our cash funding requirements and attempt to meet those
requirements through a combination of cash on hand, cash provided by operations,
available borrowings under bank lines of credit and possible future public or
private debt and/or equity offerings. At times, we evaluate possible
acquisitions of, or investments in, businesses that are complementary to ours,
which transactions may require the use of cash. We believe that our cash, other
liquid assets, operating cash flows, credit arrangements, and access to equity
capital markets, taken together, provides adequate resources to fund ongoing
operating expenditures for the next twelve months, including the intercompany
loan funding we provide to our majority owned subsidiary, EyeLock LLC. In the
event that they do not, we may require additional funds in the future to support
our working capital requirements, or for other purposes, and may seek to raise
such additional funds through the sale of public or private equity and/or debt
financings, as well as from other sources. No assurance can be given that
additional financing will be available in the future or that if available, such
financing will be obtainable on terms favorable when required.

For further information about COVID-19, refer to  "Item 1A. Risk Factors" and
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" of this Annual Report on Form 10-K.

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Impact of Inflation and Currency Fluctuation

While it is difficult to accurately measure the impact of inflation due to the
imprecise nature of the estimates required, we have experienced varying levels
of inflation during the year ended February 28, 2022, resulting in part from
various supply chain disruptions, the global chip shortage, increased shipping
and transportation costs, increased product costs, increased labor costs in the
supply chain and other disruptions caused by the COVID­19 pandemic and the
uncertain economic environment. The Company has been actively working to
mitigate these factors through a combination of sales price adjustments and
other sourcing strategies, as such issues are expected to continue into Fiscal
2023. Severe increases in inflation could affect the global and U.S. economies
and could have an adverse impact on our business, financial condition, and
results of operations. Inflation did not have a material impact on our
operations for the years ended February 28, 2021 or February 29, 2020.
Discussion of the impact of foreign currency fluctuations is included in Item
7A.

In accordance with the guidelines in ASC 830, Venezuela is designated as a
hyper-inflationary economy. A hyper-inflationary economy designation occurs when
a country has experienced cumulative inflation of approximately 100 percent or
more over a 3-year period. The hyper-inflationary designation requires our local
subsidiary in Venezuela to record all transactions as if they were denominated
in U.S. dollars. Net currency exchange gains (losses) were not material for the
years ended February 28, 2022, February 28, 2021, and February 29, 2020. All
currency exchange gains and losses are included in Other (Expense) Income on the
Consolidated Statements of Operations and Comprehensive (Loss) Income.

The Company has certain U. S. dollar denominated assets and liabilities in its
Venezuelan subsidiary, including our U.S. dollar denominated intercompany debt,
which has been subject to currency fluctuations associated with the devaluation
of the Sovereign Bolivar. The Company also has certain long-lived assets in
Venezuela, which are held for investment purposes. These long-lived assets had
no value as of February 28, 2022.

Seasonality

We typically experience seasonality in our operations. Our business is
significantly impacted by the holiday season, as we generally sell a substantial
amount of our products during September, October, and November due to increased
promotional and advertising activities during the holiday season.

Related Party Transactions

On April 29, 2021 EyeLock LLC entered into a three-year exclusive distribution
agreement ("the Agreement") with GalvanEyes LLC, a Florida LLC, managed by Beat
Kahli, the largest holder of Voxx's Class A Common Shares. The Agreement was
included in the Company's Proxy Statement filed on June 17, 2021 and was
approved by the Company's shareholders at the Annual Meeting of Shareholders
held on July 29, 2021. See Note 3 of the Notes to the Consolidated Financial
Statement of this Annual Report on Form 10-K.

Recent Accounting Pronouncements

We are required to adopt certain new accounting pronouncements. See Note 1(w) of
the Notes to the Consolidated Financial Statements of this Annual Report on Form
10-K.

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Item 7A-Quantitative and Qualitative Disclosures about Market Risk

The market risk inherent in our financial instruments and positions is the potential loss arising from adverse changes in marketable equity security prices, interest rates and foreign currency exchange rates.

Marketable Securities

Marketable securities at February 28, 2022, which are related to the Company's
deferred compensation plan, are recorded at fair value of $1,231 and have
exposure to price fluctuations. This risk is estimated as the potential loss in
fair value resulting from a hypothetical 10% adverse change in prices quoted by
stock exchanges and amounts to $123 as of February 28, 2022. Actual results may
differ.

Interest Rate Risk

Our earnings and cash flows are subject to fluctuations due to changes in
interest rates on investments of available cash balances in money market funds
and investment grade corporate and U.S. government securities. In addition, our
bank loans expose us to changes in short-term interest rates since interest
rates on the underlying obligations are either variable or fixed. In connection
with our Florida Mortgage, we have debt outstanding in the amount of $6,614 at
February 28, 2022. Interest on the Florida Mortgage is charged at 70% of 1-month
LIBOR plus 1.54%. We have an interest rate swap for the Florida Mortgage with a
notional amount of $6,614 at February 28, 2022 which locks the interest rate at
3.48% (inclusive of credit spread) through the mortgage end date of March 2026.

Foreign Exchange Risk

Voxx conducts business in various non-U.S. countries including Germany, Canada,
China, Hong Kong, Mexico, Denmark, the Netherlands, France, Australia, and Japan
and thus is exposed to market risk for changes in foreign currency exchange
rates. As a result, we have exposure to various foreign currency exchange rate
fluctuations for revenues generated by our operations outside of the U.S., which
can adversely impact our net income and cash flows. A hypothetical 10% adverse
change in the foreign currency rates for our international operations would have
resulted in a negative impact on sales and net loss of approximately $12,920 and
$840, respectively, for the year ended February 28, 2022.

While the prices we pay for products purchased from our suppliers are
principally denominated in United States dollars, price negotiations depend in
part on the foreign currency of foreign manufacturers, as well as market, trade,
and political factors. The Company also has exposure related to transactions in
which the currency collected from customers is different from the currency
utilized to purchase the product sold in its foreign operations, and U. S.
dollar denominated purchases in its foreign subsidiaries. The Company enters
forward contracts to hedge certain Euro-related transactions. The Company
minimizes the risk of nonperformance on the forward contracts by transacting
with major financial institutions. During Fiscal 2022, 2021, and 2020, the
Company held forward contracts specifically designated for hedging (see Note
1(e) of the Notes to Consolidated Financial Statements). As of February 28, 2022
and February 28, 2021, unrealized gains (losses) of $233 and $(720),
respectively, were recorded in other comprehensive income associated with these
contracts. A hypothetical 10% adverse change in the fair value of our forward
exchange contracts would have resulted in a negative impact of $32 on the fair
value of our forward exchange contracts at February 28, 2021. There were no
foreign currency hedge contracts outstanding at February 28, 2022.

We are also subject to risk from changes in foreign currency exchange rates from
the translation of financial statements of our foreign subsidiaries and for
long-term intercompany loans with foreign subsidiaries. These changes result in
cumulative translation adjustments, which are included in accumulated other
comprehensive (loss) income. At February 28, 2022, we had translation exposure
to various foreign currencies with the most significant being the Euro, Canadian
Dollar, Japanese Yen, and Mexican Peso. A hypothetical 10% adverse change in the
foreign currency exchange rates would result in a negative impact of $32 on
Other comprehensive (loss) income for the year ended February 28, 2022.

                                       50

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The Company continues to monitor the political and economic climate in Venezuela. The Company did not have any sales in Venezuela for the year ended February 28, 2022 and had no significant cash related assets subject to government foreign exchange controls. The Company's properties held for investment purposes in Venezuela had no value as of February 28, 2022.

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